The Impacts of the European Rule for Fee-Shifting on Litigation Behavior

Abstract

In honor of the international range and sophistication of Peter Hay's scholarship, this essay examines the impact of an important procedural rule that differs in Europe and the United States: shifting of attorneys fees in litigation. Existing studies suggest that, compared to a regime of no fee-shifting as in the United States, fee-shifting will have an ambiguous affect on the amount of litigation. In contrast, my analysis suggests that fee-shifting as actually practiced in many European countries will tend unambiguously to reduce the amount of litigation. It appears that actual experience in European courts confirms this theoretical prediction.

Keywords: Litigation, legal fees, fee-shifting

JEL Classification: K10, K40, K41